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The more money you make before retirement, the more you might have to cut back when you do
retire, a new study has found.

Because of Social Security benefits, some low-wage earners receive more income when they retire
than they did when they were working. By contrast, many high-wage earners see their incomes reduced
significantly in retirement, according to a report by the Employee Benefit Research Institute.

“Social Security replaces a higher proportion of low-wage earners’ income,” the Washington group
said in a recent news release. “When spousal benefits are taken into account, the total income
after age 65 might exceed the pre-65 labor earnings of single-earning households. That is not
generally the case for higher-income workers.”

As a result, high-wage earners might have to curtail spending when they retire, when low-wage
earners have more to spend. Of course, the high-income earners still will have more money to spend
in retirement than low-wage earners.

The study surveyed household incomes of workers in the 10 years before and 10 years after they
turned 65. It was conducted from 2000 to 2010.

Those in the bottom quarter of pre-retirement income “actually experienced an increase in
average household income in excess of

150 percent of their pre-65 income,” the study found.

“Since higher-income households experience a significant drop in household income after age 65,
they should be prepared to make necessary adjustments when they turn age 65,” said Sudipto
Banerjee, a researcher who wrote the report.